27 September 2000 letter by six public health
groups to EU Commissioners Lamy and Nielson

27 September 2000 letter by six public health
groups to EU Commissioners Lamy and Nielson

27 September 2000

Dear Commissioner Lamy and Commissioner Nielson,

On behalf of the following organizations, we would like
to express our views on the consultations regarding European
Union trade policy and access to medicines in developing
countries. In particular, this letter will address several
specific points that have been discussed in the
consultations, relating to intellectual property matters.

We will preface these comments by first agreeing with
all those who correctly point out that the issues of access
to medicines are complex, and involve many issues other than
intellectual property issues. For example, everyone is in
agreement that issues concerning medical infrastructure,
funding for health care, cultural attitudes and education
are of course very important issues that should be
addressed. However, we do not agree with those who suggest
that intellectual property concerns are not important.
Policies and practices on intellectual property protection
have huge influences on the prices of many medicines, and
the pricing of medicines is an important and indeed critical
issue for millions of persons who currently suffer from a
lack of access to medicines. We cannot accept a trade
policy that ignores this reality.

With respect to intellectual property concerns, we are
asking the European Union to address several issues, some of
them quite technical, that have important consequences
regarding the pricing of medicines in development countries.

1. It is morally repugnant for the European Union to oppose
production of medicines for export markets.

The large brand name pharmaceutical companies have made it
clear that they are hesitant to provide deeply discounted
priced drugs to the poor in developing countries, and that
concessions in this area will be limited in terms of price
discounts, selection of products and the restrictions on the
availability of medicines. In those case where branded
companies will not provide affordable drugs, the only
alternative sources are from generic manufacturers.

There are non-trivial economies of scale in terms of
manufacturing drugs. Most African, Latin American and Asian
countries are do not have a large enough domestic market to
justify national production of all of the needed products,
and even those that do have large domestic markets may lack
the know how and facilities to do so for particular
products.

It is very important for countries to obtain medicines by
imports, if they are going to be able to get the best prices
and the best quality drugs.

The European Union is itself seeking to benefit from the
free movement of goods, and economies of scale.

Under Article 31 of the WTO TRIPS accord, compulsory
licenses for medicines may be issued for a variety of
purposes. Article 31.f of the TRIPS normally limits the
compulsory license so that use shall be authorized
predominantly for the supply of the domestic market."
However, under Article 31.k, countries are not obliged to
apply the restrictions in (f), where such use is permitted
to remedy a practice determined . . . to be
anti-competitive." In fact, many compulsory licenses in the
United States and in Europe are issued pursuant to Article
31.k, and subject to export. Also, according to WTO and WIPO
official, a country could waive certain Article 28 patent
rights, under the general Article 30 exception clause, if
the WTO determined that such a waiver was reasonable. For
example, the WTO could decide that the exception was
reasonable in cases where the production was for export to
markets where the product was sold under a TRIPS compliant
compulsory license.

When the European Commission was asked by the Trans Atlantic
Consumer Dialogue to address the issue of complusory
licenses on the BRAC1 and BRAC2 breast cancer screening
patents, to address public health concerns of European
consumers, the Commission wrote:

2.1. Limitations on patent rights.

A patent is essentially a contract between the inventor
and the state. In return for fully disclosing his invention
to the public, the inventor is provided with a limited
monopoly. This monopoly, which typically extends for a
maximum of 20 years, provides the inventor with the
right to prevent others from making or using his
invention. It does not provide a positive right of use. The
use of the invention will remain subject to other laws
including those for example to protect fundamental human
rights.

The information disclosed by patent applications provides
an extremely useful source of technical information for
those seeking to design around or further develop patented
inventions. To enable them to do these things, patent laws
generally contain exceptions to patent infringement
covering basic non-commercial research and also experimental
use of the patented invention.

Patent laws also include safeguards such as compulsory
licensing to prevent the abuse of patent rights. Such abuse
could comprise for example failing to provide the market on
reasonable terms, or the denial of licences to another
patent holder who is dependant on that licence to exploit
his invention.

Clearly there is an abuse of patent rights if an invention
is priced so high that it endangers the public health, and
clearly developing countries have a moral right and indeed a
public duty to take steps to ensure that their public has
access to medicines.

If the European Government opposes the use of patent
exceptions for production for export, it will make it much
more difficult for developing countries to obtain
inexpensive medicines, even under a compulsory license. At
the present time this is not an impossible problem, because
there are many products off patent in India, Brazil,
Thailand and other countries, that could be sources for
imported products. But this will change over time as the
TRIPS is implemented, and even today it is a problem because
developing countries cannot purchase many products from high
quality manufacturers in Europe, the United States, Israel,
Japan and elsewhere.

2. The European Union should not seek to place
unreasonable restrictions on the use of test data for drug
approvals.

The big branded companies are seeking a very aggressive
interpretation of Article 39.3 of the TRIPS accord, with
respect to the unfair commercial use of test data used for
drug approvals. The EU rule in this regard is currently
restricted to only some regulatory uses, and was adopted
primarily to compensate for a lack of patent protection on
pharmaceuticals in Spain and Portugal, a condition that has
since been remedied.

There is a WTO dispute now involving Article 39.3 and
Argentina, and the EU's role in the dispute will be
important. The EU should not insist on restrictive
interpretations of this clause in the TRIPS, or more
generally in its bilateral trade negotiations.

A restrictive interpretation of Article 39.3 would frustrate
efforts at compulsory licensing of patents, because even if
a patent was licensed, exclusive rights to the data would be
a barrier to market entry. At a very minimum, the EU should
recognize the need to have a form of compulsory licensing of
test data, in cases where this is appropriate or needed.

3. The European Union should support the creation of a
working group on access to medicines in the WTO.

The two points above illustrate only a few of several
technical areas where the WTO will have to make important
judgements in terms of the TRIPS. The WTO is also engaged
in ongoing reviews of the TRIPS. We welcome the current WHO
efforts to monitor trade policies, but this is not a
substitute for a WTO working group on access to medicines.
It should be noted that the WTO has the real power in trade
negotiations, and that it has a responsibility to protect
the public health in its policies. In the Seattle WTO
meeting, the European Union offered a poorly conceived
proposal on compulsory licensing of the WHO essential
medicines list that was ultimately withdrawn because of
opposition from public health groups. The confusion over
this issue illustrated the gap between trade officials and
public health groups, and a WTO working group on access to
medicines would begin to bridge that gap.

The Working Group on Access to Medicines has been endorsed
by the Trans Atlantic Consumer Dialogue (TACD), MSF, Health
Action International, Act Up, the Consumer Project on
Technology and a number of other NGOs working on the access
to medicines campaign. The failure of the European Union to
support the creation of such a working group is evidence
that despite the public relations efforts, there is still no
real effort to change policy in order to support better
access to medicines.